Research carried out by Canada Life UK earlier this year revealed that over half of UK adults do not have a Will[1]. Although it can be uncomfortable to think about death, having a Will is the cornerstone of good estate planning.
If you do not have a Will or if you have one that needs updating, here are five reasons why you should put it high up on your to-do list.
If you die without making a valid Will, you die ‘intestate’. This means that the intestacy rules will determine how your estate will be divided. Under the intestacy rules, there is a prescribed order in which individuals are entitled to inherit (as set out in our Intestacy Flowchart). For example, if you were to die whilst married with children, your surviving spouse would take your personal belongings, £322,000 (known as the ‘statutory legacy’), and half the remainder of your estate. Your children would take the other half of the remainder of your estate. Not only might this not be in accordance with your wishes, it is also not very efficient for inheritance tax purposes.
Only married couples, civil partners and other close relatives are entitled to inherit under the intestacy rules, which fails to take into account modern family relationships. Many wrongly assume that unmarried partners or cohabitees will be viewed as ‘common law spouses’ in the eyes of the law. In reality, they will be treated as strangers and stand to inherit nothing under the intestacy rules.
Making a Will enables you to choose the beneficiaries of your estate and ensure that your loved ones are properly provided for.
Executors are the individuals who will administer your estate when you die. Where assets are left on trust within a Will, executors will often also act as trustees. Executors and trustees play a vital role in ensuring your wishes are complied with beyond the grave, and having a Will enables you to choose the best people for the job.
Up to four executors can apply for the grant of probate. It is common to appoint at least two executors in your Will and these should ideally be individuals who you trust, such as close family members or friends. You also have the option of appointing a professional executor, sparing your loved ones from administering your estate during a period of bereavement.
If you die without a Will, an ‘administrator’ will be appointed to administer your estate. The Non-Contentious Probate Rules 1987 set out the order in which your family members can apply to obtain the grant of administration. However, the administrator may not be who you would have chosen to administer your estate.
A guardian is someone who you appoint to take responsibility for your minor children if you (and anyone else with parental responsibility) die before their 18th birthday.
In practice, it is best to appoint a guardian in your Will (rather than by way of a separate document) as a Will is less likely to be lost or overlooked following your death. This is often accompanied by guidance which sets out your wishes with regards to your children’s upbringing.
If you die without having appointed a guardian for your minor children, only the Court will be able to make an appointment. The individual appointed may not be who you would have chosen to look after your children.
When you have a Will, you have the opportunity to leave legacies, such as assets and cash, to certain individuals, charities or organisations. You have the freedom to leave your estate to whomever you choose and you can ensure that any sentimental items pass in accordance with your wishes.
As above, the intestacy rules are strict and provide no leeway for you to leave gifts to different individuals or causes close to your heart.
If your estate is worth more than £325,000, a Will may enable you to reduce the amount of inheritance tax that is payable on your estate by arranging the distribution of your assets to maximise the benefit of any applicable reliefs and exemptions.
Wills can therefore be valuable tax planning tools, often involving the use of trusts.
It is important to keep your Will under regular review. Ideally, this should take place every five years or when there is a significant life event, such as marriage, death or divorce.
For more information, or if you would like to make a Will, please contact a member of the Tax, Trusts & Succession team.
[1] Over half of UK adults do not have a will | Canada Life UK
